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Exhibit 10
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
SHOREWOOD PACKAGING CORPORATION
WITH
XXXX X. XXXXX
AGREEMENT made effective as of May 3, 1998, among SHOREWOOD PACKAGING
CORPORATION, a Delaware corporation having its principal executive offices at
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (herein called the "Corporation") and
XXXX X. XXXXX, currently residing at 00 Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000
(herein called the "Executive").
WITNESSETH:
The Corporation and the Executive entered into that certain Employment
Agreement dated January 25, 1996 and made effective as of May 1, 1995 (the
"Prior Employment Agreement"), which provides for the employment of the
Executive by the Corporation upon the terms and conditions set forth therein.
The Corporation and the Executive desire to enter into a new employment
agreement upon the terms and conditions hereinafter set forth, which employment
agreement will supersede and replace the Prior Employment Agreement in its
entirety.
The Corporation recognizes that the longer the Executive remains in the
full time active employ of the Corporation, the more valuable will be any
consultative and advisory services that the Executive may provide during his
full time employment by the Corporation.
The Corporation recognizes that the possibility of a proposal from a third
person, whether solicited by the Corporation or unsolicited, concerning a
possible business combination with the Corporation, including the acquisition of
a substantial share of the equity or voting securities of the Corporation, may
be unsettling to the Executive and deter him from continuing full time
employment with the Corporation.
This Agreement intended to help assure a continuing dedication by the
Executive to his duties to the Corporation notwithstanding the possibility or
occurrence of a business combination proposal.
The Corporation and the Executive believe it imperative that should the
Corporation receive proposals from third parties with respect to its future, the
Executive should, without being influenced by the uncertainties of his own
situation, assess and advise the Corporation whether such proposals would be in
the best interest of the Corporation and its stockholders and take such other
action regarding such proposals as the Corporation might determine to be
appropriate.
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Accordingly, the parties desire to and do hereby enter into this Agreement
as of the date first set forth above.
NOW, THEREFORE,
1. EMPLOYMENT; TERM. Subject to the terms hereof, the term of this
Agreement shall be from May 3, 1998 through and including May 2, 2003. The
Corporation agrees to and does hereby employ the Executive as Chief Executive
Officer and President for the period commencing May 3, 1998 and terminating May
2, 2003 (the "Employment Period") and the Executive agrees that he shall serve
as Chief Executive Officer and President of the Corporation during the
Employment Period. The foregoing notwithstanding, in the event of any "Change in
Control" (as hereinafter defined) of the Corporation at any time during the last
two fiscal years of the Corporation beginning prior to May 2, 2003, the
Employment Period hereunder shall be automatically extended through and
including May 2, 2005.
2. DUTIES. Except as hereinafter provided, the Executive shall during the
Employment Period perform the executive and administrative duties and functions
and shall have the powers and privileges of the Chief Executive Officer and
President of the Corporation, as such duties, functions, powers and privileges
are defined in the By-Laws of the Corporation in effect on the date hereof and
as currently interpreted, and, to the extent not defined therein, as the same
are customarily performed and exercised by a Chief Executive Officer or a
President of a publicly owned corporation incorporated in one of the states of
the United States of America. The Executive shall serve as the Chairman of the
Board of Directors (and a member of the Executive Committee or any similar
committee having powers of the Board of Directors now in existence or hereafter
created) of the Corporation without any additional compensation for such
services for so long as the Executive is elected to serve on the Board, the
Executive Committee or any similar committee. As used in this Agreement, the
term "Corporation" includes each Subsidiary of the Corporation. So long as he is
an officer of the Corporation, the Executive agrees to devote substantially all
his business time to the business and affairs of the Corporation, and to exert
his best efforts in the performance of his duties as an officer, director and
member of any committee of the Board of Directors of the Corporation to which he
may be elected, so as to promote the profit, benefit and advantage of the
business to the Corporation. The Executive agrees to accept the payments to be
made to him under this Agreement as full and complete compensation for the
services required to be performed by him under this Agreement.
3. COMPENSATION. As compensation for the services to be rendered by the
Executive pursuant to this Agreement, subject to the conditions herein stated,
the Corporation agrees to pay to the Executive all of the following:
(a) BASE SALARY. Beginning May 3, 1998 and until the expiration of the
Employment Period, the Corporation shall pay to the Executive a base salary (the
"Base Salary") at a minimum rate of $800,000 per year, payable in weekly or
bi-weekly installments as nearly equal as may be practicable or otherwise in
accordance with the Corporation's customary payroll practices for its
Executives. Executive's Base Salary shall be reviewed annually and may be
increased at the Corporation's discretion. This Agreement shall not be deemed
abrogated or
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terminated if the Corporation, in its discretion, shall determine to increase
the compensation of the Executive for any period of time or if the Executive
shall accept such increase; but, nothing herein shall be deemed to obligate the
Corporation to make any such increase.
(b) BONUS. The Corporation shall pay to the Executive a signing bonus in an
aggregate amount of $1,000,000, payable in full although earned ratably over the
five-year Employment Period if Executive continues to be employed by the
Corporation at the end of each such year. In addition, during the Employment
Period the Executive shall be entitled to receive annual performance bonuses in
accordance with the terms and conditions of the Corporation's Amended and
Restated 1995 Performance Bonus Plan (the "Bonus Plan") in the form annexed
hereto as Exhibit I, as same may be amended from time to time hereafter in
accordance with its terms. The provisions of the Bonus Plan shall govern the
award of performance bonuses by the Corporation to Executive under the Bonus
Plan, and, to that extent, shall supersede any inconsistent or contrary
provisions contained in the main body of this Agreement. The Corporation may in
its discretion award bonuses to Executive outside of the scope of the Bonus
Plan; but, nothing herein shall be deemed to obligate the Corporation to award
any such bonuses.
(c) PARACHUTE EFFECTIVE DATE. Notwithstanding the present effectiveness of
this Agreement, the provisions of Sections 3(g),(h), and (m) of this Agreement
shall become operative only when, as and if there has been a "Change in
Control" of the Corporation. For purposes of this Agreement, the terms
"Subsidiary" and "Subsidiaries" shall mean each corporation of which more than
50% of the outstanding partial stock entitled to vote for directors is owned
directly or indirectly by the Corporation and a "Change in Control" of the
Corporation shall be deemed to have occurred upon the occurrence of any of the
following events:
(i) A change in control of the direction and administration of the
Corporation's business of a nature that if any securities of the Corporation
were registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), would be required to be reported in response to (a) Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Exchange Act, or (b)
Item 1(a) of Form 8-K under the Exchange Act as each is in effect on the date
hereof and any successor provision of such regulations under the Exchange Act,
whether or not the Corporation is then subject to such reporting requirements;
or
Any "person" or "group" (as such term is used in connection with
Section 13(d) and 14(d)(2) of the Exchange Act) but excluding any employee
benefit plan of the Corporation or any "affiliate" or "associate" of the
Corporation (as defined in Regulation 12b-2 under the Exchange Act)(a) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation representing
fifty percent (50%) or more of the combined voting power of the Corporation's
outstanding securities then entitled ordinarily (and apart from rights accruing
under special circumstances) to vote for the election of directors or (b)
acquires by proxy or otherwise 50% or more of the combined voting securities of
the Corporation having the right to vote for the election of directors of the
Corporation, for any merger or consolidation of the Corporation, or for any
other matter; or
(iii) During any period of twenty-four (24) consecutive months, the
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individuals who at the beginning of such period constitute the Board of
Directors of the Corporation or any individuals who would be "Continuing
Directors" (as hereinafter defined) cease for any reason to constitute at least
a majority thereof; or
(iv) The Corporation shall cease to meet the basic conditions of listing
on the New York Stock Exchange (or any other securities exchange on which the
Corporation's Common Stock, as hereinafter defined, is listed for trading) in
respect of the number of shares of the Corporation's Common Stock held by the
public; or
(v) There shall be consummated (A) any consolidation, merger or
recapitalization of the Corporation or any similar transaction involving the
Corporation, whether or not the Corporation is the continuing or surviving
corporation, pursuant to which shares of the Corporation's common stock, par
value $.01 per share ("Common Stock"), would be converted into cash, securities
or other property, other than a merger of the Corporation in which the holders
of Common Stock immediately prior to the merger have the same proportion and
ownership of common stock of the surviving corporation immediately after the
merger, (B) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all, or substantially all, of the assets
of the Corporation or (C) the adoption of a plan of complete liquidation of the
Corporation (whether or not in connection with the sale of all or substantially
all of the Corporation's assets) or a series of partial liquidations of the
Corporation that is de jure or de facto part of a plan of complete liquidation
of the Corporation; provided, that the divestiture of less than substantially
all of the assets of the Corporation in one transaction or a series of related
transactions, whether effected by sale, lease, exchange, spin-off, sale of the
stock or merger of a Subsidiary or otherwise, or a transaction solely for the
purpose of reincorporating the Corporation in another jurisdiction, shall not
constitute a "Change in Control"; or
(vi) The Board of Directors of the Corporation shall approve any merger,
consolidation or like business combination or reorganization of the Corporation,
the consummation of which would result in the occurrence of any event described
in Section 3(o)(i), (ii) or (v) above.
(d) DEFINITION OF "CONTINUING DIRECTORS". For purposes of this Agreement,
"Continuing Directors" shall mean the directors of the Corporation in office on
the date hereof and any successor to any such director and any additional
director who after the date hereof (i) was nominated or selected by a majority
of the Continuing Directors in office at the time of his nomination or
selection and (ii) who is not an "affiliate" or "associate" (as defined in
Regulation 12b-2 under the Exchange Act) of any person who is the beneficial
owner, directly or indirectly, of securities representing ten percent (10%) or
more of the combined voting power of the Corporation's outstanding securities
then entitled ordinarily to vote for the election of directors.
(e) TERMINATION RIGHTS UNCHANGED. Except as provided in Section 3(f) below,
nothing in this Agreement shall affect any right which the Executive may
otherwise have to terminate his employment by the Corporation or a Subsidiary,
nor shall anything in this Agreement affect any right which the Corporation or
any Subsidiary may have to terminate the Executive's employment at any time in
any lawful manner, subject to the provision that in the
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event of termination of the Executive's employment under the circumstances
specified in Sections 3(g) and 3(m) below following a Change in Control, the
Corporation will provide to the Executive the payments and benefits described
in Sections 3(g) and 3(m) of this Agreement.
(f) VOLUNTARY TERMINATION. In the event any person or organization
commences a tender or exchange offer, circulates a proxy statement to the
Corporation's stockholders, or takes other steps designed to effect a Change in
Control of the Corporation, the Executive agrees that in order to receive the
benefits provided by this Agreement, he will not voluntarily leave the employ of
the Corporation or any of its Subsidiaries, and will continue to perform his
regular duties and to render the services specified in the recitals of this
Agreement, until such person or organization has abandoned or terminated his or
its efforts to effect a Change in Control or until a Change in Control has
occurred. Should the Executive voluntarily terminate his employment before any
such effort to effect a Change in Control of the Corporation has commenced, or
after any such effort has been abandoned or terminated without effecting a
Change in Control and no such effort is then in process, this Agreement shall
lapse and be of no further force or effect. Should the Executive voluntarily
terminate his employment with the Corporation or any of its Subsidiaries during
such time as any person or organization has commenced, but has not yet
abandoned, any steps designed to effect a Change in Control of the Corporation,
but at a time when a Change in Control has not been effected, the Executive
shall not be entitled to receive any of the benefits of Sections 3(g) and 3(m)
hereof.
(g) TERMINATION FOLLOWING CHANGE IN CONTROL. If a Change in Control of the
Corporation shall have occurred, then Executive shall be entitled to the
benefits provided in Section 3(m) hereof upon the subsequent termination of his
employment by the Corporation or the Executive for any reason or for no reason
within the applicable period set forth in Section 3(m) hereof following such
Change in Control.
(h) TERMINATION BY REASON OF DEATH OR DISABILITY. If the Executive's
employment is terminated by reason of his death or Disability during the two (2)
years following a Change in Control, the Executive shall be entitled to death or
long-term disability benefits, as the case may be, from the Corporation no less
favorable than the most favorable benefits to which he would have been entitled
had the death or termination for Disability occurred at any time during the
period commencing one year prior to the initiation of actions that resulted in a
Change in Control. If prior to any such termination for Disability during the
two (2) years following a Change in Control, the Executive fails to perform his
duties as a result of incapacity due to physical or mental illness, he shall
continue to receive his Base Salary (as defined herein) less any benefits as may
be received by him under the Corporation's or Subsidiary's disability plan until
his employment is terminated for Disability, and shall be entitled to the most
favorable other benefits applicable under the Corporation's policies during the
period commencing one year prior to the initiation of actions that resulted in
the Change in Control.
(i) DEFINITIONS. For purposes of this Agreement:
(i) "Disability" shall mean that, as a result of the Executive's
incapacity due to physical or mental illness, the Executive has been absent
from the full-time
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performance of his duties with the Corporation for six (6) consecutive months
and, within thirty (30) days after Notice of Termination is given to the
Executive, he has not returned to the full-time performance of his duties. Any
question as to the existence of Disability shall be determined by a qualified
independent physician selected by the Executive (or, if he is unable to make
such selection, such selection shall be made by any adult member of the
Executive's family) and approved by the Corporation. The written determination
of such physician shall be final and conclusive for purposes of this Agreement.
(ii) "Retirement" shall mean that the Executive shall have retired
after reaching the earliest normal or early retirement date provided in the
Corporation's retirement plans as then in effect (or if Executive retires after
a Change in Control of the Corporation, as in effect on the date of the Change
in Control).
(iii) "Cause" shall mean:
(A) The willful and continued failure by the Executive to perform
substantially his duties with the Corporation (other than any such failure
resulting from the Executive's incapacity due to physical or mental illness or
any such actual or anticipated failure resulting from termination by the
Executive for Good Reason) which is not cured within thirty (30) days after a
written demand for substantial performance is delivered to the Executive by the
Board of Directors, which demand specifically identifies the manner in which
the Board of Directors believes that the Executive has not substantially
performed his duties; or
(B) The willful engagement in conduct by the Executive which is
demonstrably and materially injurious to the Corporation, monetarily or
otherwise, which is not discontinued within five (5) days after written demand
to cease and desist from such conduct is delivered to the Executive by the
Board of Directors, which demand specifically identifies the conduct which the
Board of Directors believes is injurious to the Corporation; or
(C) Conviction for a felony or other crime punishable by imprisonment
for more than one (1) year, or the entering of a plea of nolo contendere
thereto.
Notwithstanding any of the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to the Executive a resolution duly adopted by the affirmative vote of not less
than a majority of the entire membership of the Board of Directors (other than
the Executive) at a meeting called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive, together with his
counsel, to be heard before the Board of Directors), finding that in the good
faith opinion of the Board of Directors the Executive was guilty of conduct set
forth above in clause (A), (B) or (C) and specifying the particulars thereof
in detail.
For purposes of this Section 3(i), no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by him knowing and with the intent that such action or inaction would not
be in the best interests of the Corporation or otherwise was done or omitted to
be done in bad faith.
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(iv) "Base Salary" shall mean the annual base salary paid to the
Executive immediately prior to the Change in Control of the Corporation
(provided that such amount shall in no event be less than the annual base salary
paid to the Executive during the one (1) year period immediately prior to the
Change in Control).
(j) NOTICE OF TERMINATION. Any purported termination of employment by
the Corporation by reason of the Executive's Disability or for Cause, or by the
Executive for any or no reason, shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice given by the Executive or by the Corporation
or a Subsidiary, as the case may be, which shall indicate the specific basis for
termination (if any) and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for determination of any payments under
this Agreement; provided, however, that the Corporation shall not be entitled to
give a Notice of Termination that it is terminating Executive's employment
hereunder with the Corporation or a Subsidiary by reason of Executive's
Disability or for Cause after the expiration of six (6) months following the
last to occur of the events specified by it to constitute Cause or Disability.
(k) DATE OF TERMINATION. For purposes of this Agreement, "Date of
Termination" shall mean (i) if the Executive's employment is terminated for
Disability, thirty (30) days after Notice of Termination is given (provided that
the Executive shall not have returned to the full-time performance of his duties
during such thirty (30) day period) or (ii) if the Executive's employment is
terminated by the Corporation for Cause or by the Executive for any or no
reason, the date specified in the Notice of Termination, which shall be not more
than ninety (90) days after such Notice of Termination is given. If within
thirty (30) days after any Notice of Termination is given, the party who
receives such Notice of Termination notifies the other party that a Dispute (as
hereinafter defined) exists, the parties agree to pursue promptly the resolution
of such Dispute with reasonable diligence. Pending the resolution of any such
Dispute, the Corporation or a Subsidiary shall make the payments and provide the
benefits to the Executive provided for in Section 3(m) or Section 5 hereof, as
the case may be. In the event that it is finally determined, either by mutual
written agreement of the parties, by a binding arbitration award or by a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or the time for appeal therefrom having expired and no appeal having
been perfected), that a challenged termination by the Corporation or a
Subsidiary by reason of the Executive's Disability or for Cause was justified,
then all sums paid by the Corporation or a Subsidiary to the Executive from the
Date of Termination specified in the Notice of Termination until final
resolution of the Dispute pursuant to this Section 3(k) shall be repaid promptly
by the Executive to the Corporation or a Subsidiary, with interest at the base
rate charged from time to time by the Corporation's principal commercial bank.
In the event that it is finally determined that a challenged termination by the
Corporation or a Subsidiary by reason of the Executive's Disability or for Cause
was not justified, then the Executive shall be entitled to retain all sums paid
to the Executive pending resolution of the Dispute.
(l) DEFINITION OF "DISPUTE". For purposes of this Agreement, "Dispute"
shall mean in the case of the Executive's termination as an Executive with the
Corporation or a Subsidiary for Disability or Cause, that the Executive
challenges the existence of Disability or Cause.
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(m) PARACHUTE PAYMENTS UPON TERMINATION; CHANGE OF CONTROL. If within two
(2) years after a Change in Control of the Corporation, the Executive's
employment shall terminate for any or no reason, subject in each case to Section
3(k) hereof, the Corporation or a Subsidiary will pay to the Executive as
compensation for services rendered, beginning not later than the fifth business
day following completion of the "Parachute Procedure" (as hereinafter defined)
if the Corporation elects to follow such procedure and not later than the
fifteenth day after the Date of Termination otherwise:
(i) the Executive's Base Salary through the Date of Termination, any
existing fringe benefits (including medical benefits) and incentive compensation
for the fiscal year in which the termination occurs in accordance with any
arrangements then existing with the Executive and proportionate to the period of
the fiscal year which has expired prior to the termination; and
(ii) a lump sum severance payment equal to 2.99 times the Executive's
average annual compensation during the Base Period (as hereinafter defined)
(subject to any applicable payroll or other taxes and charges required to be
withheld computed at the rate for supplemental payments) provided that in no
event shall "Total Payments" (as hereinafter defined) exceed 2.99 times the
Executive's "Base Amount," as such term is defined in Section 28OG of the
Internal Revenue Code (the "Code"). The Executive's Base Amount shall be
determined in accordance with temporary or final regulations promulgated under
Section 28OG of the Code then in effect, if any. In the absence of such
regulations, if the Executive was not employed by the Corporation (or any
corporation or partnership affiliated with the Corporation (an "Affiliate")
within the meaning of Section 1504 of the Code or a predecessor of the
Corporation) during the entire five calendar years (the "Base Period") preceding
the calendar year in which a Change in Control of the Corporation occurred, the
Executive's average annual compensation for the purposes of such determination
shall be the lesser of (1) the average of the Executive's annual compensation
for the complete calendar years during the Base Period during which the
Executive was so employed or (2) the average of the Executive's annual
compensation for both complete and partial calendar years during the Base Period
during which the Executive was so employed, determined by annualizing any
compensation (other than nonrecurring items) includible in the Executive's gross
income for any partial calendar year or (3) the annual average of the
Executive's total compensation for the Base Period during which the Executive
was so employed, determined by dividing such total compensation by the number of
whole and fractional years included in the Base Period. Compensation payable to
the Executive by the Corporation or any Affiliate or predecessor of the
Corporation shall include every type and form of compensation includible in the
Executive's gross income in respect of the Executive's employment by the
Corporation or any Affiliate or predecessor of the Corporation, including
compensation income recognized as a result of the Executive's exercise of stock
options or sale of the stock so acquired, except to the extent otherwise
provided in temporary or final regulations promulgated under Section 28OG of the
Code. For purposes of this Section 3(m) a "change in control of the Corporation"
shall have the meaning set forth in Section 28OG of the Code and any temporary
or final regulations promulgated thereunder, subject to the limitation stated in
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Section 3(m)(iii) below; and
(iii) (A) Notwithstanding anything to the contrary contained herein, in the
event that any portion of the aggregate payments and benefits (the "Total
Payments") received or to be received by the Executive, whether paid or payable
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Corporation, a Subsidiary or any other person or entity,
would not be deductible in whole or in part by the Corporation, a Subsidiary or
by such other person or entity in the calculation of its Federal income tax by
reason of Section 28OG of the Code, the Total Payments payable shall be reduced
by the least amount necessary so that no portion of the Total Payments would
fail to be deductible by reason of being an "excess parachute payment."
(B) At the option of the Corporation, no payments shall be made
pursuant to this section until the procedure described in this Section 3(m)(iii)
is completed (the "Parachute Procedure"). If the Corporation elects to comply
with such procedure, the Corporation shall cause its independent auditors to
deliver to the Executive, within fifteen (15) days after the Date of
Termination, a statement which shall indicate whether payment to the Executive
of the Total Payments would cause any portion of the Total Payment not to be
deductible in whole or part in the calculation of Federal income tax by reason
of Section 28OG of the Code, or would cause, directly or indirectly, an "excess
parachute payment" to exist within the meaning of Section 28OG of the Code. Such
statement shall set forth the value, calculated in accordance with the
principles of Section 28OG of the Code and any temporary or final regulations
promulgated thereunder, of any non-cash benefits or any deferred or contingent
payment or benefit payable pursuant to the terms of this Agreement or any other
plan, arrangement or benefit, together with sufficient information to enable the
Corporation to determine the payments that may be made to the Executive without
resulting in a loss of deduction under Section 28OG of the Code or an "excess
parachute payment" to the Executive within the meaning of Section 28OG of the
Code. The Corporation warrants to the Executive the accuracy of all information
and calculations supplied to the Executive in such statement. If such statement
indicates that payment of the Total Payments would result in a loss of a
deduction by reason of Section 28OG of the Code or would cause an "excess
parachute payment" to exist within the meaning of Section 28OG of the Code, the
Executive shall, within thirty (30) days after receipt of the statement, deliver
to the Corporation a statement indicating which of the payments and benefits
specified in such auditor's statement the Executive elects to receive; provided,
however, that the payments and benefits selected by the Executive shall not
result in a loss of deduction under Section 28OG of the Code or an "excess
parachute payment" to the Executive within the meaning of Section 28OG of the
Code and, provided, further, however, that if the Corporation does not comply
with the Parachute Procedure, it shall deliver the payments required by this
Section 3(m) within fifteen (15) days after the Date of Termination. Delivery of
the statement by the Executive to the Corporation shall constitute completion of
the Parachute Procedures; and
(iv) The Corporation shall contest any improper assessment of an
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excise or other tax imposed as a result of determination that an "excess
parachute payment" has been made to the Executive within the meaning of Section
28OG of the Code. If it is established pursuant to a final determination of a
court of competent jurisdiction or an Internal Revenue Service proceeding that
an "excess parachute payment" does in fact exist, within the meaning of Section
28OG of the Code, then the Executive shall pay to the Corporation, upon demand,
an amount not to exceed the sum of (i) the excess of the aggregate Total
Payments over the aggregate Total Payments that would have been paid without any
portion of such payment being deemed an "excess parachute payment" within the
meaning of Section 28OG of the Code and (ii) interest on the amount set forth in
clause (i) above at the applicable federal rate specified in Section 1274(d) of
the Code from the date of receipt by the Executive of such excess until the date
of such repayment.
4. BENEFITS. (a) The executive shall be entitled to participate in any
life, accident, disability and health insurance, hospitalization or any other
plan or benefits afforded by the Corporation to its executives generally, if and
to the extent that the Executive is eligible to participate in accordance with
the provisions of any such plan or for such benefits. Nothing herein is
intended, or shall be construed, to require the Corporation to institute any,
or any particular, plan or benefits. In addition, the Executive shall be
furnished with an automobile lease allowance of $2,250 per month during the
Employment Period plus reimbursement for reasonable insurance, maintenance,
gasoline and parking expenses incurred in furtherance of the Corporation's
business.
(b) The Corporation shall maintain in effect during the Employment
Period a term life insurance policy on the life of Executive in a declining
amount equal to any one time to the aggregate Base Salary payable hereunder over
the then unexpired balance of the Employment Period. In addition, the
Corporation shall maintain in effect during the Employment Period disability
insurance for the benefit of Executive covering, in the event this Agreement is
terminated on account of Executive's Disability, 100% of Executive's Base Salary
through the end of the Employment Period less any benefits as may be received by
him during such time under the Corporation's other disability plans. In
connection therewith, Executive shall, at such time or times and at such place
or places as the Corporation may reasonably direct, subject himself to such
physical examination and execute and deliver such documents as the Corporation
may deem necessary.
5. EARLY TERMINATION; NO CHANGE OF CONTROL. If prior to the expiration
of this Agreement or a Change in Control of the Corporation, (a) the Executive
fails because of Disability to perform services of the character contemplated
by Section 2 of this Agreement; or (b) if the Corporation's Board of Directors
determines that the Executive's employment should be terminated for Cause;
then, the Corporation may by written Notice of Termination terminate
Executive's employment. In addition, this Agreement shall terminate immediately
upon the death or Retirement of Executive prior to a Change of Control of the
Corporation. Upon any termination of the Executive's employment under this
Section 5, the Executive shall be deemed removed from all positions held by him
with the Corporation, its subsidiaries and affiliates.
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effective as of the Date of Termination, and shall be entitled to receive
solely all amounts and benefits to be paid or provided by the Corporation under
Sections 3(a), 3(b) and 4 of this Agreement up to the Date of Termination and
any other amounts to be paid thereafter to Executive or his beneficiaries
pursuant to any deferred compensation plan or other employee benefit plan or
program in effect on the Date of Termination, to the extent he remains eligible
to participate thereunder under the terms of the Corporation's applicable
policies and plans. The provisions of this Section 5 shall terminate and cease
to be of any force or effect immediately upon any Change in Control of the
Corporation.
6. (a) COMPLETE PAYMENT. Upon the payment of the amounts provided in
this Agreement, the Corporation shall have no further liability of any kind or
nature whatsoever to the Executive under this Agreement, except such liability,
if any, as may continue under any plan or for the benefits (in accordance with
the express terms hereof) referred to in Section 4 hereof. Notwithstanding the
foregoing, Executive expressly reserves any rights he may have at law, equity or
otherwise in the event that his employment by the Corporation is terminated in
contravention of this Agreement.
(b) NON-COMPETITION. The Executive expressly covenants and agrees
that during the term of this Agreement he will not, directly or indirectly, own,
manage, operate, join, control or participate in or be connected with as an
officer, employee, partner, stockholder, or otherwise, any business, individual,
partnership, firm or corporation (other than a parent of the Corporation or a
subsidiary or affiliate of such parent), which is at the time engaged wholly or
partly, in the business of manufacturing and marketing packaging products or in
any business which is directly in competition with the then business of the
Corporation or any subsidiary or affiliate of the Corporation (as defined in the
General Rules and Regulations promulgated under the Securities and Exchange Act
of 1934), or any firm, partnership or corporation which shall succeed to all or
a substantial part of the business of the Corporation, or any such subsidiary or
affiliate.
(c) INVESTMENTS. Nothing in this Agreement is intended, or shall be
construed, to prevent the Executive during the term of his employment hereunder
from investing in the stock or other securities listed on a national securities
exchange or actively traded on the over-the-counter market of any corporation
which is at the time engaged wholly or partly in any business which is, directly
or indirectly, at the time, in competition with the business of the Corporation
or any such subsidiary or affiliate, or any firm, partnership, or corporation
which shall succeed to all or a substantial part of the business of the
Corporation, or any such subsidiary or affiliate, provided that the Executive
and direct members of his family living in the same household as the Executive
shall not directly or indirectly, hold, beneficially or otherwise, in the
aggregate, more than three percent of any issue of such stock or other
securities of any one such corporation.
(d) CONFIDENTIAL INFORMATION. The Executive expressly covenants and
agrees that he will not any time, during the term of his employment hereunder or
thereafter and
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without regard to when or for what reason, if any, such employment shall
terminate, directly or indirectly, use or permit the use of any trade secrets,
customers' lists or other information of, or relating to, the Corporation, or
any Subsidiary or affiliate, in connection with any activity or business,
except the business of the Corporation or any Subsidiary or affiliate of the
Corporation, and will not divulge such trade secrets, customers' lists, and
information to any person, firm, or corporation whatsoever, except as may be
necessary in the performance of his duties hereunder.
(e) REMEDIES. It is expressly understood and agreed that the
services to be rendered hereunder by the Executive are special, unique, and of
extraordinary character, and in the event of the breach by the Executive of any
of the terms and conditions of this Agreement on his part to be performed
hereunder, including, but not limited to, the terms and provisions of
subparagraphs (b) or (d) of this Section, then the Corporation shall be
entitled, if it so elects, to institute and prosecute any proceedings in any
court of competent jurisdiction, either in law or equity, for such relief as it
deems appropriate, including, without limiting the generality of the foregoing,
any proceedings, to obtain damages for any breach of this Agreement, or to
enforce the specific performance thereof by the Executive or to enjoin the
Executive from performing services for any other person, firm or corporation.
7. SEVERABILITY. The invalidity or unenforceability of any
provisions of this Agreement in any circumstance shall not affect the validity
or enforceability of such provision in any other circumstance or the validity or
enforceability of any other provision of this Agreement, and except to the
extent such provision is invalid or unenforceable, this Agreement shall remain
in full force and effect. Any provision in this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions hereof in such jurisdiction, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
8. NOTICES. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and if sent by registered mail,
to his then residence in the case of the Executive or to its principal office in
the case of the Corporation, and shall be deemed given when deposited in the
United States mails, postage prepaid.
9. SUCCESSORS. The rights and obligations of the Corporation
under this Agreement shall inure to the benefit of and shall be binding upon any
successor of the Corporation or to the business of the Corporation. Neither this
Agreement or any rights or obligations of the Executive hereunder shall be
transferable or assignable by the Executive; provided, however, that this
Agreement shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to the Executive hereunder if he had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee
or other designee or, if there is no such designee, to the Executive's estate.
10. ATTORNEYS' FEES. If litigation shall be brought to enforce
or interpret any
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provision contained herein, the Corporation shall indemnify the Executive for
his attorneys' fees and disbursements incurred in such litigation and pay
prejudgment interest on any money judgment obtained by the Executive calculated
at the base rate of interest charged from time to time from the date that
payment should have been made under this Agreement; provided, however, that the
Executive shall not have been found by the court to have had no cause to bring
the action, or to have acted in bad faith, which findings must be final with the
time to appeal therefrom having expired and no appeal having been taken.
11. OBLIGATION TO PAY COMPENSATION. The Corporation's obligation to
pay the Executive the compensation and to make the arrangements provided herein
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, any setoff, counterclaim,
recoupment, defense or other right which the Corporation may have against the
Executive or anyone else. All amounts payable by the Corporation hereunder shall
be paid without notice or demand. Except as expressly provided herein, the
Corporation waives all rights it may now have or may hereafter have conferred
upon it, by statute or otherwise, to terminate, cancel or rescind this Agreement
in whole or in part. Except as otherwise provided herein, each and every payment
made hereunder by the Corporation shall be final and the Corporation will not
seek to recover for any reason all or any part of such payment from the
Executive or any person entitled thereto. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment, and if Executive obtains such other employment, any
compensation earned by Executive pursuant thereto shall not be applied to
mitigate any payment made to Executive pursuant to this Agreement.
12. SUCCESSORS BOUND BY AGREEMENT. The Corporation shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation, by written agreement, to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Corporation would
be required to perform it if no such succession had taken place. As used in this
Agreement, the term "Corporation" shall mean the Corporation as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement required by this Section 12, or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
13. ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement between the Executive and the Corporation concerning the subject
matter hereof and supersedes all prior agreements between the parties with
respect thereto. In the event that Executive's employment is terminated
subsequent to a Change in Control as provided herein, performance by the
Corporation of its obligations hereunder shall constitute full settlement and
release of any claim or cause of action, of whatsoever nature, which the
Executive might otherwise assert or claim against the Corporation or any of its
directors, stockholders, officers or employees on account of such termination.
No provisions of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing, signed by the
Executive and an authorized officer of the Corporation. No waiver by either
party hereto at any time of any breach by the other party hereto of compliance
with an condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of any similar or
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dissimilar provision or condition at such same or at any prior or subsequent
time. No assurances or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. However, this Agreement is in
addition to and not in lieu or any other plan providing for payments to or
benefits for the Executive or any agreement now existing or which hereafter may
be entered into between the Corporation and the Executive, provided that,
notwithstanding anything to the contrary contained in the terms of any such
plan or agreement, in the event of Executive's termination, within (2) years
after a Change in Control as provided herein, of Executive's employment, this
Agreement shall govern the rights and the obligations of the Corporation and
the Executive. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York without
giving effect to the provisions, principles, or policies thereof relating to
choice or conflict of laws.
14. MISCELLANEOUS. The masculine or neuter gender shall include the
feminine gender. This Agreement may be executed in more than one counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly signed this Agreement
in duplicate original on the 10th day of November 1999 effective as of May 3,
1998.
SHOREWOOD PACKAGING CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
President
/s/ Xxxx X. Xxxxx
---------------------------
Xxxx X. Xxxxx
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